Reliance: Will quarter earnings report soothe or stir investors' worries?

Reliance Industries, the index bellwether is scheduled to report its earnings on April 30, 2021.   

Reliance has formed a higher low at Rs 1,876.70 on April 22 and bounced to an earlier support area. It has faced resistance at a prior support area of Rs 1,995. The 38.2 per cent retracement level is at Rs 2,012. Before the financial results, it may trade between the zone of Rs 1,960 to Rs 2,01. As April series is expiring just in a day, at-the-money 2000 strike call options (CE) and 1900 strike put options (PE) have the highest open interest and volume in April and May series. This shows that the traders want to encash the theta in this stock. The 2000 CE and PE together have a premium of Rs 28.55. This means that if the stock closes between Rs 1,976 - Rs 2033, the theta will melt like ice. In this condition, one can apply a short straddle by selling both 2000 strike CE and PE in this April series.   

For May series, we can be bullish technically as it formed a higher bottom. The next month at-the-money (ATM - 2000 strike) has the highest open interest as well as the premiums. The premiums are very high, as the CE is trading at Rs 78 with an open interest of 4,562, while the PE has an open interest of 1,721 with a premium of Rs 72. This means that together, they have a premium of Rs 150. As the event (financial results) are placed at the beginning of the new series, we can apply the volatile strategy or apply a bullish vertical spread. If you have enough capital, you can also apply the short straddle but in case you have limited capital, you can apply the bull call spread strategy.